Jobs shift from suburbs to CBD

Melbourne's CBD is drawing in employment from the suburbs. Photo: Craig Abraham

MELBOURNE'S CBD is defining the city - it has become the employment giant sucking jobs from the suburbs, transforming property prices and demanding better rail services to the centre of town.

Melbourne was once known as a ''doughnut city'', because businesses and activity were retreating from Melbourne's sleepy core.

But now, the city's changing employment mix away from manufacturing towards financial and business services has meant an increase in jobs in the centre of the city. And Melbourne's focus inwards has had a dramatic impact on house prices.

In the past 20 years there has been a more than six-fold increase in the cost of dwellings near the CBD compared to the outer suburbs, where real prices have only doubled, according to a new report.

''The changing industrial structure of our cities means our transport networks are increasingly being called upon to carry large numbers of people into concentrated city centres within a very limited time period,'' he said.

''The only mode capable of doing this is rail because of the numbers it can carry,'' Mr Albanese said at the launch of the State of Australian Cities 2012 report.

''One single rail link operating at peak efficiency carries the same number of people as a 10-lane freeway.''

Mr Albanese said the forces that had spread Australian cities since the war, ''predominantly manufacturing, are being replaced by knowledge industries - the banking, legal, insurance and myriad of other business services''.

He said while manufacturing plants were traditionally located on the city fringe or in industrial zones, ''the job-rich knowledge industries tend to concentrate in the heart of our cities''.

He said this meant more and more workers commuting to the centre of the city. ''At the same time housing growth continues to creep outwards, making the journey to these jobs increasingly difficult,'' he said.

He said there had to be a reduction between where people lived and worked.

''If we don't address this, there will be major consequences for the productivity, sustainability and liveability of our major cities.''

Other key findings in the federal government cities report included:

■ Not enough homes are being built: the gap between population increase and housing supply is now the largest for 100 years.

■ Since 1996, house prices in Australia have increased faster and for the longest period since at least 1880.

■ In 1996, 60 per cent of house owners owned their house outright compared to 46 per cent in 2011.

■ Sydney is Australia's most expensive city with the highest average costs for electricity, mortgage interest, transport and recreation.

■ New houses in Australia are the largest in the world, eclipsing those in the United States.

■ The total value of Australian housing was estimated at $4.85 trillion in July 2012, nearly four times the value of listed domestic equities ($1.23 trillion).